The Taxation of Couples

Bierbrauer, Felix; Boyer, Pierre C.; Peichl, Andreas und Weishaar, Daniel (30. June 2023): The Taxation of Couples. Collaborative Research Center Transregio 190, Discussion Paper No. 405

Abstract

Are reforms towards individual taxation politically feasible? Are they desirable from a welfare perspective? We develop a method to answer such questions and apply it to the US federal income tax since the 1960s. Main findings are: As of today, Pareto-improvements require a move away from joint taxation. Revenue-neutral reforms towards individual taxation are not Pareto-improving, but attract majoritysupport. Such reforms are rejected by Rawlsian welfare measures and supported by ones with weights that are increasing in the secondary earner’s income share. Thus, there is a tension between the welfare of “the poor” and the welfare of “working women.”

• Item Type: Paper
• Keywords: taxation of couples; tax reforms; optimal taxation; political economy; non-linear income taxation
• Faculties: Economics > Collaborative Research Center Transregio "Rationality and Competition"
• Subjects: 300 Social sciences > 330 Economics
• JEL Classification: C72, D72, D82, H21
• Language: English
• DFG: Gefördert durch die Deutsche Forschungsgemeinschaft (DFG) - 280092119